Dry bulk shipping rates seen remaining firm

NEW YORK  Dry bulk shipping rates are expected to remain firm after a recent climb due to limited ship availability and long lead times following financially lean years for companies.

The large asset classes are extremely favorable as a result of underordering, Ziad Nakhleh, chief financial officer of Athens, Greece-based DryShips Inc., said during a panel discussion at Capital Link Inc.s eighth annual Shipping Forum in New York, adding that lead times for capesize and Panamax vessels from top Japanese yards are about three years.

The rise has been led by record Chinese iron ore imports, according to Symeon Pariaros, chief administrative officer of Maroussi, Greece-based Euroseas Ltd., which are expected to continue due to increasing world ore supply and a recent focus on reducing pollution in China.

The imported (iron) ore does not have to be beneficiated, which means fewer emissions in-country, according to Fred Gordon, senior vice president of corporate affairs at Athens-based Navios Maritime Holdings Inc.

Dry bulk shippers, meanwhile, are reluctant to lock in forward contracts because they expect rates to rise further.

Weve been keeping (our customers) on spot because we expect rates to go up, Nakhleh said.

But while the current upcycle is mainly supply driven, given the large amount of new global iron ore capacity coming online and Chinas willingness to stockpile, demand would have to catch up eventually, one panelist warned.

In the longer term we still depend on demand from China. We must not forget this side of the story, Egil Husby, chief risk officer at Oslo, Norway-based shipping company Western Bulk AS, said.